SINGAPORE, Oct 18 (Reuters) - Crude oil futures inched

higher on Friday, supported by a surprise drop in U.S. oil

inventories and simmering Middle East tensions, but prices were

headed for their biggest weekly loss in more than a month on

worries of lower demand.

Brent crude futures rose 16 cents, or 0.2%, to

$74.61 a barrel by 0025 GMT while U.S. West Texas Intermediate

crude was at $70.84 a barrel, up 17 cents, or 0.2%.

Both contracts settled higher on Thursday for the first time

in five sessions after data from the Energy Information

Administration (EIA) showed that U.S. crude oil, gasoline and

distillate inventories fell last week.

However, U.S. crude production hit a record high of 13.5

million barrels per day last week, EIA data showed, adding to

concerns about rising supply as Libyan output resumes and as the

Organization of the Petroleum Exporting Countries (OPEC) and

their allies, a group known as OPEC+, planned to further unwind

production cuts in 2025.

Brent and WTI are set to fall about 6% this week, their

biggest weekly decline since Sept. 2, after OPEC and the

International Energy Agency cut their forecasts for global oil

demand in 2024 and 2025 and as concerns eased about a potential

retaliatory attack by Israel on Iran that could disrupt Tehran's

oil exports.

"Speculative positioning across the ICE Brent complex

strengthened from historically low levels, on heightened

geopolitical risk of a potential Israeli strike on Iran's oil

infrastructure," Citi analysts said in a note.

"While markets appear to have focused on reports that the

U.S. urged Israel not to target oil infrastructure, driving the

latest price easing, these risks remain high as rhetoric remains

heated," they added.

Citi expects global oil demand to slow to 900,000 bpd in

2025 from 1 million bpd this year on an economic slowdown and as

more electric vehicles hit the road.

The "potential impact of China's emerging economic stimulus

plans on oil demand is uncertain, and more robust support may

only result in a limited boost," it added.

(Reporting by Florence Tan; Editing by Muralikumar

Anantharaman)